Terms & Conditions

[peterdelamothe]

This month’s changes to the two main planks in Labour’s anti-poverty programme are among the biggest shifts in welfare reform since the Beveridge plan was implemented over 50 years ago. The scale of the operation was always going to cause problems. The scope of the tax credit programme has been widened, eligibility increased and an extra £2.5bn invested this year in child support alone. Where once working family tax credit was restricted to families with children, the new working tax credit now embraces couples without children too. The new child tax credit (CTC), which brings together four in-work and out-of- work benefits that low-income parents receive, has been widened so that over 5 million families are now eligible. But the switchover has been far from smooth.
Some trouble was unavoidable. Like any major change to welfare, there were winners and losers. And true to form, while the losers have been screaming loudly, the winners have hardly peeped up at all. But the troubles are more serious than just “running in” problems. Hundreds of thousands of eligible people have still not registered for the tax credits and hundreds of thousands of others, who have belatedly tried, have found it difficult, and often impossible, to get through to Inland Revenue’s call centres handling inquiries. Only 2.6 million out of the 5 million-plus families eligible for CTCs had applied by the January 31 deadline – and even by this month only 3.9 million had applied. Despite an extra 700 staff drafted last week to dedicated call centres to handle an expected 200,000 extra calls, tens of thousands were unable to get through.

What should happen now? Labour must be honest about the poor launch. Denial would be quickly punctured, and defensiveness will not resolve anything. There is nothing wrong with the main architecture. Ministers were right to concentrate on income-related benefits, which are by far the most effective means of helping the poor. It was right to insist that CTC should be paid to the main carer, which will usually be the mother, that means working fathers will see a dip in their pay. But they will have to tackle take-up in a much more robust manner. There have been wide publicity campaigns, but an older approach might be better: beefed up local welfare teams that actively go out and find the eligible. Without higher take-up, ministers will miss their admirable anti-poverty goals.